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NSW manufacturers threatened by dwindling gas supplies from 2017

Manufacturers who are heavily dependent on gas have told the NSW government that they are having difficulty in securing gas supplies from 2017 and beyond. Households will also be affected by rising gas prices and uncertainty of supply. NSW only produces 5% of its gas needs, and has not developed its significant gas reserves fast enough to meet demand.

"The last thing we want is manufacturing going out the door," said the NSW deputy secretary for resources and energy, Kylie Hargreaves, on Thursday at an industry conference.

The government has indicated that "nothing is off the table" in recognition that threatened gas supplies could result in NSW losing manufacturers to other states with much better gas security.

They only have only a little more than two years to come up with a solution.

Possible answers include those based on industry requests to:

Fast-track coal-seam gas projects at Gloucester and the Pilliga (which together could supply 70% of NSW’s gas requirements by 2020)

Bring gas to NSW from other states by building either a LNG import terminal or a gas pipeline from the Northern Territory.

Alternatively, reducing gas use through energy efficiency projects may be much more cost-effective.

The NSW government is investigating an incentive scheme to economically reward reduction in gas use, similar to the way the NSW Energy Savings Scheme (ESS) has reduced electricity use in the state.

Duncan Stone, Managing Director of Out Performers, has indicated that manufacturers could easily reduce their gas use by several percentage points a year by implementing gas-saving projects with paybacks of less than two years. He is calling for the government to fast track the inclusion of gas reduction projects into the ESS. “The sooner we start on schemes like this, the sooner we start saving gas and don’t need to waste precious capital expenditure on large infrastructure projects that risk being stranded assets in five to ten years’ time,” Mr Stone, an experienced civil engineer, said.

He went on to outline the ways that manufacturers could save gas, including optimising boiler efficiency, checking regularly for steam leaks, maximising condensate return, improving lagging on pipework, recovering heat from flue gases, and utilising flash steam. Solar was also a cost-effective option for pre-heating feedwater for boilers and other hot water needs in some situations, Mr Stone added.

This would fit in with the NSW government’s target to achieve 16,000 GWh in energy savings from reductions in electricity and gas consumption by 2021, under the NSW Energy Efficiency Action Plan.